Get smooth and slow 25fps video from 50fps footage
After some research, and the help of the people who commented and answered my question, I now understand that Blender handles output frame rates differently to the way it is done in commercial video editing programs (ie. Power Direcotr, Adobe Premiere Elements).

When the output frame rate does not match (ie. is smaller or higher) the footage's input rate, the result is either a slowed down or a sped up video.

It might seem obvious to Blender aficionados but wasn't to me as a newcomer, who was used to video editing programs that preserved the original speed of the video, whatever the chosen output frame rate.

So there are two ways to slow down a video: simply lower the output frame rate or skip frames with the frame step (thanks @Edgel3D). Both work but I recommend using the frame rate as it results in an exact frame rate (using frame step resulted in a video with 25.0499 fps). However both also affect the entire video, and individual sequences thus need to be adjusted singly using a speed effect.

In my case, I was already unknowingly slowing down the video as my output frame rate was halved (I had muted audio), and additionally slowing it down with the 0.5x speed effect, resulting in a jerky output video.